Exclusive Special Report: Pulling back the curtain

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The real story behind the resignation of Steven Libman

By Kevin Kane and Jordan Fischer

Steven Libman’s abrupt resignation last month left Carmel residents and officials puzzled.

The former president and CEO of The Center for the Performing Arts left his post suddenly July 29, just weeks after signing a five-year contract extension. Citing personal reasons and “enormous” time demands involved in running the center, a brief statement released by Libman, 51, left more questions than answers.

Since his resignation, rumors have multiplied as the public and news media attempted to piece together the following story.

The first domino fell in mid-May when, on the heels of the April 30 issues of Current, which broke news of high-profile acts coming to the Palladium, Libman instructed his staff not to speak to or provide information to Current. This action was later confirmed via e-mail by the center’s public relations manager, John Hughey.

“(Current Executive Vice President Steve Greenberg) and I thought that showed a flaw in judgment,” Current President Brian Kelly said. “How could the only medium to reach every address in the center’s own hometown be denied the opportunity to report the center’s news on the same footing with other media? We were appalled, and we wrote about the injustice Libman’s decision perpetrated on our readers.”

Current long had heard unverified allegations of aggressive accounting and excessive spending of the center’s funds, but the financial information of the nonprofit charged with running the center, Carmel Performing Arts Foundation, is not available to the public. When it became clear Libman likely would request a greater subsidy for 2012 – perhaps up to $4 million in taxpayer money –Current hired a freelancer to investigate the center’s leadership and spending.

However, that investigation revealed a possible entirely different problem: Libman was, purportedly, having a romantic relationship with his assistant, a move which could put both the city and foundation at risk of lawsuits stemming from potential state and federal Equal Employment Opportunity Commission violations. (Current is not publishing the woman’s name, because it does not reveal the identities of persons who may be victims of sexual crimes.)

Two months after launching its investigation, Current had “reached the end of its rather limited legal expertise,” according to Kelly. Concerned about the negative impact of running an as-yet incomplete story, Kelly and Greenberg decided to present the findings to the city.

“We never considered turning the information over to the city until we realized the damage that could be done to taxpayers and the center by running it prior to a more thorough investigation,” Kelly said. “Additionally, Steve and I had great concerns that criminal laws might have been violated and felt we had a legal obligation to turn over our information to appropriate city officials.

“We’ve always been extremely supportive of the center, and we always look for ways to protect our fellow taxpayers.”

To corroborate Current’s findings, City Attorney Douglas Haney hired a private investigator who, for about $8,000, tailed Libman for “one or two weeks,” Haney said.

“This is nothing unique,” he added. “I have to investigate it or I’ve violated my oath to protect the city … it’s not nefarious. You have to corroborate allegations not only for the public, but out of fairness to the accused.”

Not only did Haney’s investigation confirm the relationship, but it also identified other potential wrongdoings.

“He promoted her and paid her more money in the middle of their dating relationship without posting (the position) or making it available to other employees,” Mayor Jim Brainard told Current. “This action, in and of itself, could create liability. Without question, it caused morale issues among other employees.”

Current’s sources also said the two would leave the office during the workday for several hours per week, purportedly even flying on several occasions to other cities on the center’s dime, which, according to a source, included East Coast cities.

According to Brainard, once the investigation reached a point “where there was absolutely no question that all the key facts had been confirmed,” he presented the findings to the foundation’s board, which immediately brought its executive committee together to discuss the issues.

After meeting with the executive committee of the board, Libman’s resignation was effective.

The confrontation

Libman and his now-former assistant were bound for Chicago on the morning of July 29, according to one of Current’s sources, when a caller from the executive board asked him to return to Carmel for a meeting. Libman then was confronted with evidence the city had collected in its investigation. He tendered his resignation shortly after 2:30 p.m.

At 2:54 that afternoon, Current first reported Libman’s resignation on the Internet. More than two hours later, Hughey distributed a press release announcing Libman’s departure and Frank Basile’s appointment as interim president and CEO. In the meantime, Brainard was burning up the phone lines, talking to all the city council members he could reach; he said he wanted them to make certain those he was able to reach were fully informed of the city’s involvement and the board’s actions prior to learning of it elsewhere.

“After a great deal of reflection, I have decided to pursue other opportunities,” Libman said in the release. “I have loved my tenure at the Center, but the time demands have become enormous. I am very proud of what has been accomplished and I know the Center has a very bright future.”

Libman said he preferred to not comment until he had the opportunity to review this report.

Why now?

Weeks after Current first learned of Libman’s relationship through independent research, it now is disclosing the full story.

“Brian and I made the decision to go with the story now, satisfied that our reporting team had all available facts at its disposal,” Greenberg said. “Part of that decision was based on the many leaks with which everyone was becoming familiar, and many of those leaks contained incorrect information.”

Brainard said Current’s handling of the situation has been “unorthodox” from a journalistic standpoint, but that a more traditional approach could have prevented a proper follow-up investigation from taking place.

“Publishing the story before the investigation was completed could have jeopardized the fact-finding process,” he said. “There’s a duty to report everything and make sure it comes out, but in a way that doesn’t harm the community.”

‘A necessary expense’

In the wake of Libman’s departure, several City Council members have questioned an $8,000 expenditure by the city to hire a private investigator. At the time, the expense was not officially linked to what was an ongoing investigation by the city into Libman’s conduct.

“The council wants to know what we’re paying for with this invoice to International Investigators,” said council President Eric Seidensticker, adding that the council may not approve the claim until it is satisfied with the city’s answers about the expense.

According to Haney and Brainard, the expense was a necessary part of the city’s investigation, saying the city could have been sued for defamation had it not conducted a thorough investigation before bringing allegations about Libman to the foundation’s board.

Brainard also said there were fears that in the case of a lawsuit against the Center for possible EEOC violations, Carmel taxpayers ultimately would be held liable for the damages.

“There’s nobody there to make up the difference if they get sued,” Brainard said. “We’d be expected to make up the difference, and the taxpayer would absolutely be liable for those expenses.”

Potential cost

Current consulted with attorney Sandra Blevins, a partner at the Indianapolis-based Betz & Blevins law firm, which focuses on employment law, about possible damages the city could incur through such a lawsuit. According to Blevins, typical cases result in damages from $250,000 to $500,000, though it’s “definitely possible” for some cases to hit seven digits. For example, in May of this year, a Kansas jury awarded $10.6 million to a former UBS Financial Services employee after she brought a sexual harassment suit against the company.

“What happens in these situations, even if it’s allegedly consensual, if the relationship sours, which they always do, then the subordinate almost always claims that it was not consensual and the person of authority had them under their sway,” Blevins said. “How do you prove consent in that case? It’s very difficult. That creates a great deal of risk.”

Brainard said he is confident the city took the right steps in investigating the allegations.

“The board, and I believe the city as well, has handled this about as well as it could be handled,” he said. “Immediately upon receiving this information, it was investigated and then turned over to the board. I don’t see how it could have been handled any better.”

Haney added that the city’s use of a private investigator was necessitated by the fact that Libman was not an employee of the city, and initial evidence was deemed insufficient to warrant a criminal investigation.

“I don’t like secrecy any more than anyone else, because it makes people think of black helicopters and dead drops,” he said. “But it’s just part of the job. … It happens every day.”

A track record?

“I was very disappointed, when the facts brought to us by Current proved to be true,” Brainard said. “(Libman) let down people who trusted him. …The fact that he did this shows very poor judgment.”

But Libman’s resignation in Carmel wasn’t his first. He now has resigned from three top executive positions with performing arts centers since 2004, and the reasons for his leaving previous employers are not entirely clear.

In September 2008, Libman resigned as manager of the La Jolla Playhouse after a little more than three years on the job. The official announcement from the Playhouse on Sept. 16, 2008, said Libman was stepping down “to pursue an expanding consulting practice,” referring to his company, The Libman Group, founded in 2004.

In an article published Sept. 21, 2008, in the San Diego Union-Tribune, Libman gave more details behind his reasons for leaving. The article says Libman, 48 at the time, insisted his quitting was both amicable and voluntary and was done to allow him to spend more time with his family and other interests, including sailing.

Yet less than a year later, Libman agreed to become the first executive director of an under-construction performing arts center, a decision requiring he work at least 40 hours a week and move to the Midwest.

Not only did Libman leave the Tony Award-winning Playhouse to eventually head Carmel’s new center 11 months later, but his change in positions also resulted in a pay cut – at least initially. His first-year salary in Carmel was $200,000, with the amount increasing to $225,000 in the second year and $250,000 in the third. According to the Union-Tribune, Libman made $232,826 when he left La Jolla.

Current found no one willing to discuss Libman’s resignation from La Jolla on the record, and when asked for an interview, La Jolla’s board president at the time of Libman’s exit said: “It’s the policy of the La Jolla Playhouse and our board not to comment on former employees.”

‘Structural imbalance’

More information is available about Libman’s time with the Pittsburgh Ballet Theatre, where he worked from 1987 to 2004. According to his résumé, Libman joined the PBT as its development director, a position through which he claims to have “increased individual and trustee contributions by over 300 percent.” He was promoted to managing director in 1991 and held this position until resigning May 11, 2004.

While some involved with the PBT went on the record with local media outlets after Libman’s resignation, praising him for his fundraising success, the theater struggled financially at times during and immediately after his tenure.

The following excerpt is from a summary of the PBT’s history presented on its Web site:

“While PBT enjoyed great artistic success during this period (following the arrival of Artistic Director Terrence Orr in 1997), a structural cash flow deficit plagued the organization. During this period, PBT’s annual budget had grown to nearly $8 million. In June 2004, Libman resigned his position of Managing Director. PBT engaged consultant Thomas B. Harris, a specialist in the field of transition in nonprofit organizations, whose assessment uncovered a structural imbalance of approximately $800,000 per year.”

In January 2005, nearly eight months after Libman’s resignation, the Pittsburgh Post-Gazette reported PBT’s deficit was approaching $1 million, a figure E. Jeanne Gleason, chair of the theater’s board at the time, disputed to the paper. The same article said the PBT was able to finish the 2004-2005 season in the black on June 30, 2005, through major gifts from donors, additional fundraising and a week of lucrative performances at Joyce Theater in Lower Manhattan.

But significant cuts needed to be made to keep the PBT in the black, beginning with the 2005-2006 season during which the 40-member orchestra was eliminated to cut more than $500,000 from the budget. Libman’s eventual successor, Harris Ferris, gradually reinstated the orchestra and, after taking the reins in February 2006, led PBT to two consecutive fiscal years in the black. Before taking up his new duties, Ferris told the Post-Gazette the company’s deficit was a result of a lack of attention to detail and said the company had “lost control of its production costs.”

However a source from the area with knowledge of Libman’s tenure with the PBT said he had conflicts with personnel, too.

“There were financial and personal missteps along the way that led to his resignation,” said the source, who agreed to speak only on the condition of complete anonymity.

Asked to elaborate further on any alleged “personal missteps,” the source declined. The only reported conflicts refer to a clash with dancers in 2003, when Libman proposed reducing rehearsal times and using more student performers.

Of the jobs listed on his résumé when he applied to head Carmel’s new center, Libman spent far more time at Pittsburgh than any other stops. He served as the managing director of the Auburn Civic Theatre in New York from 1981 to 1983 and had the same title at the Fulton Opera House in Lancaster, Pa. from 1983 to 1986. As of press time, Current was unsuccessful in its attempts to learn anything about his departures from these companies, again told – this time by the Fulton Opera House – that company policies would not permit comments on previous employees.

A ‘forecast’?

With his resignation last month, Libman’s tenure with The Center for the Performing Arts ended after less than two years, but a previous center employee questioned some of Libman’s decisions, beginning with his earliest days there.

Anne Poynter, now the executive director of the Downtown Westfield Association, worked for the center from March 2008 until her resignation in April 2010. When Libman joined the staff in September 2009, Poynter said she soon became concerned with some of the things she was seeing.

“I felt like his spending was irresponsible,” she said. “I was in charge of the books. …It seemed like Steven was hiring a lot of consultants and spending a lot of money out of the gate.”

That spending, she said, often included flights and stays in other cities, primarily in New York and California. While Poynter said she knows at least some of these trips were for legitimate purposes, she said the reasons for others were “sometimes vague,” and the end result was an executive director who was frequently away from the center and its staff.

“He was hired for his fundraising ability,” she said. “I ran his schedule and the books from September to April. I don’t know that I can even recall fundraising meetings that I set up.”

Poynter acknowledged she did not know everything, and that some of her perceptions could be inaccurate. Additionally, she admitted, she and Libman “were like oil and water.” But while she said her leaving could have simply been a result of an irresolvable personality conflict, she believes there was more to it.

“I was not given the option (to resign or be terminated); I was told to pack up and leave immediately,” she said. “And I was not told why other than ‘There is no place for you here.’ I feel it’s because I raised some concerns. …I don’t think he wanted his staff to know any more than he wanted them to know.”

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